July 28, 2019
FOR IMMEDIATE RELEASE
WINNIPEG - A Manitoba Liberal Government will create an independent commission to review Manitoba’s tax system, as has been requested by The Winnipeg and The Manitoba Chambers of Commerce.
Manitoba Liberal Leader Dougald Lamont says that over the years, NDP and PC governments alike have used the tax system as a way of handing out political goodies at election time. This has resulted in a two-tier system that favours the well-to do, is difficult and expensive to administer, and has created growing deficits and debt.
“Manitoba Liberals want to ensure we have a province with fair taxation, where everyone pays their fair share,” said Lamont.
Manitoba has forecasted over 11 billion in revenue from taxes and fees for 2019/2020.
Canadians for Tax Fairness and other advocacy organizations have argued that many governments in Canada could shrink their deficits without raising taxes — simply by making sure people and companies pay the taxes they owe and by reducing loopholes that make it legal for people to avoid paying taxes.
Lamont pointed out that both his political opponents, PC Premier Brian Pallister and NDP Leader Wab Kinew have used the same legal loophole to avoid paying taxes — running their income through corporations to avoid paying personal income tax at a much higher rate.
“If you want to see examples of how the 1% legally avoid taxes, we need look no further than PC Leader Brian Pallister and NDP Leader Wab Kinew, who both created corporations so they can avoid paying personal income taxes,” said Lamont.
NDP Leader Wab Kinew disclosed that he owns a small corporation that receives royalties from his book. This allows him to pay a much lower corporate rate and taxes on capital gains rather than income tax rates. Pallister told a committee that one of several companies he owns, Pallister Financial, was created after he was advised he was holding “too much profit” in his insurance company.
Pallister also owns the Pallister Family Trust, Pallister Financial, and a corporation in Costa Rica, which between 2008 and 2012 was a blacklisted tax haven under The Organisation for Economic Co-operation and Development (OECD).
“This is an issue where the PC and NDP leaders’ position on taxes is exactly the same. Manitoba Liberals take a very different view,” said Lamont.
A Manitoba Liberal Government will:
- Establish an Independent Commission to review Manitoba’s tax system and make recommendations on how to make Manitoba’s tax system more fair, effective, and progressive - while ensuring everyone pays their fair share.
- Companies that have been implicated in tax evasion and tax avoidance schemes, whether in Canada or abroad, may be called as witnesses, but will not be part of the Commission.
- Publish a comprehensive list of “tax expenditures” - who benefits from tax breaks, credits and more to the Manitoba Government’s public purse.
- Combat tax avoidance, tax evasion, and Manitoba and Canada being used as tax havens by creating a public, searchable registry of beneficial owners of corporations in Manitoba. The PC Government failed to make such a registry either public or searchable.
- Call on the Federal Government to be more aggressive in combating tax evasion and tax avoidance, including international tax havens.
Lamont said Liberals would not prejudge the results of the Commission, but said the ultimate goal of Manitoba Liberals is to create jobs and grow the economy so taxes can be lowered over the long term.
“We are focused on good jobs and investment because while tax cuts don’t lead to growth, growth can lead to tax cuts. By growing the tax base, we can lower the tax burden,” said Lamont.
Both the Winnipeg and Manitoba Chambers of Commerce have called for an overall tax review for Manitoba. Reviews in other provinces, like Quebec, have been quite successful.
Over the years, both NDP and PC governments have created an ever-more complicated mess of tax credits, exemptions and exceptions. They are difficult to administer and often unfair —especially because many exemptions are only available to people of means. The result is that a select few with very high incomes may pay a lower tax rate than people who make much less.
Taxes pay for roads, bridges, hip replacements, chemotherapy and math and science lessons.
Manitoba and other governments in Canada have deficits because they have revenue problems, not spending problems. In the 2016 election, the PCs criticized the NDP for not spending on infrastructure, for not spending on emergency radios, for failing to act on poverty and many other measures. These were all accurate.
Manitoba’s deficits were caused by a drop in revenue, from two sources: provincial revenues and federal transfers.
The 2008 global financial crisis had a profound impact on Manitoba and Canada’s economy. Up to that point, governments across Canada had been running balanced budgets and surpluses, even as they cut taxes. This included the NDP in Manitoba as well as the Liberals and Conservatives Federally.
After 2008, as economies slumped, revenues dropped. Manitoba lost provincial revenues from slowdowns, and was squeezed badly by the federal Conservative government. The federal funding formula for health care was changed twice. One change, which Brian Pallister voted for as an MP, permanently cut Manitoba’s health funding. Another was that the Conservatives froze funding to Manitoba for six years straight.
The Manitoba NDP increased spending at a rate lower than GDP growth. There are many areas where government spending on specific programs have been flat for years or even decades. The two areas that have seen a doubling in expenditure have been justice (prisons) and CFS.
Since being elected, the PC government has chosen to postpone balancing the budget, even while receiving over $700-million a year in new transfer payments, and has elected to reduce tax revenues — even though bond ratings agencies warned that it could result in a credit downgrade.
Manitoba needs a tax system that is fair, progressive, effective — where everyone pays their fair share and where government can pay its bills.
A Manitoba Liberal Government will establish:
An independent commission to review all taxes and fees, both personal and corporate, and make recommendations on how to overhaul Manitoba’s taxation system.
It would include assessing new, stable revenue streams for municipalities and education.
Their mandate will include a focus on:
- Tax fairness, equity and progressivity
- Effectiveness - ensuring that taxes are collected and paid
- Consider how taxes and tax types incentivize different types of development (business growth, density, land use)
- Ensuring stable revenues so provincial and municipal governments can pay their bills and sustain services
- Change the current tax structure to lessen the burden on Manitobans while ensuring government programs and services receive the funding they need
-Report from the tax review would be completed within the first year in office, with implementation expected during the second budget, dependent on recommendations from the commission.
The commission will also be tasked with developing recommendations on a renegotiated carbon tax and how best to ensure it is applied fairly and effectively to reduce emissions and reduce the tax burden on families.
The Commission will not take recommendations or advice from companies that have been implicated in tax evasion, though they may be called as witnesses.
A Manitoba Liberal Government will also:
- Make the Manitoba Government’s “tax expenditures” public, which are foregone revenues as a result of individuals and businesses taking advantage of legal tax credits, loopholes and benefits.
- Create an online searchable registry of beneficial ownership. This is a key requirement in improving transparency and the fight against global tax avoidance, tax evasion, and money-laundering. Currently, Canada is unable to exert pressure on international tax havens because its own banking and beneficial ownership laws are so opaque. Canada is itself a tax haven where “snow-washing” of funds takes place. The PC government created a law requiring disclosure of beneficial ownership, but the registry is not online nor is it searchable.
Commission Cost $150,000